MEXICO CITY Feb 7 (Reuters) - Mexico's competition watchdog
said on Thursday it will fine the fixed-line phone company
controlled by Carlos Slim $52 million for monopolistic
practices.

The Federal Competition Commission (Cofeco) said Telmex,
which is part of Slim's phone behemoth America Movil,
should pay 657 million pesos after Cofeco found it denied rival
telephone company Axtel access to some of its
network.

Slim's Telmex, which he bought from Mexico's government in
1990, refused to connect its network with Axtel's in various
locations over two years, Cofeco said.

"Telmex has substantial power in the market for local and
long distance connections and, under the terms of its
(government) concession, it is obliged to offer connections to
third parties," said the statement.

Both Axtel and Telmex have 30 days to ask Cofeco to review
its ruling.

Telmex said in a that it believes Cofeco's ruling is
unfounded and the company is fully in compliance with the terms
of its concession.

Cofeco said in 2011 it would fine Slim's America Movil $1
billion for anti-competitive practices but after the company
disputed that fine, the watchdog allowed it to skip the payment
in return for cutting charges to competitors.

Mexico's competition watchdog has been trying to increase
supervision of Slim's companies, but with little success to
date.

As a result of the lack of competition in Mexico's phone
market, Mexicans were overcharged $13.4 billion a year from 2005
to 2009 for phone and Internet services, according to a January
2012 report published by the Organization for Economic
Co-operation and Development (OECD), which was funded by the
Mexican government.

Axtel shares were down 5.17 percent at 3.30 pesos in
afternoon trading, while America Movil shares were flat at to
15.86 pesos.

Axtel, which offers broadband and home-phone line services,
has waded deep into debt in its attempt to compete with Telmex.
The company last month completed a debt exchange offer to keep
it afloat.